This startup may have just revolutionized Type 2 diabetes treatment

“It was a very big bet, because it’s not the sort of things that companies like ours generally do,” says Kurt Graves, CEO of Boston-based biotech startup Intarcia Therapeutics. “But it worked completely. It’s a dream come true.”

Graves is talking about Intarcia’s decision in early 2013 to launch head-to-head tests of its lead diabetes drug candidate against Merck’s (MRK) Januvia, the world’s leading oral diabetes medication with around $6 billion in gross sales. The tests involved around 535 patients suffering from Type 2 diabetes, and were done separately from Intarcia’s more traditional Phase 3 trials that compared its drug to a placebo.

Last night Intarcia announced the top-line results, purporting to show that patients put on Intarcia’s drug nearly doubled glucose reductions and just over tripled weight loss, when compared to those who were put on Juvania. Graves says that the company is in negotiations to publish its full results in a “prestigious” scientific publication, but that he wanted to get the basic information out as soon as possible.

“Whenever you’re involved in a major trial that finishes, I think it’s good to publish the results,” Graves explains. “First, it’s a courtesy to the investigators and patients who participated in the trial, or for investigators doing other trials. Second, even though we’re a private company, we operate like a public one and we’d consider this to be material information for our investors. Third, this study is going to trigger a $100 million payment from a $300 million royalty deal we announced earlier this year.”

What’s particularly notable about Intarcia’s drug is that it isn’t taken orally. Instead, it is contained in a matchstick-sized osmotic pump that is implanted during a one-minute outpatient procedure, and which can provide continual treatment for up to a year.

Intarcia now plans to file for FDA approval in the first half of next year, after which the drug would undergo a review process that typically lasts around 12 months. That means that the company could be directly competing with Merck by mid-2017.

That’s also around the same time that Intarcia would plan to go public, as Graves has said he believes the company would be undervalued until it reaches commercialization. The aforementioned royalty deal valued Intarcia at upwards of $5.5 billion, compared to the $1.6 billion mark it received from a $200 million venture capital financing last year.

A Merck spokeswoman declined to comment specifically on the Intarcia results, but said that Merck is “confident that physicians will continue to choose Januvia… a once-daily pill that has been studied in more than 14,000 people with type 2 diabetes and has been used by millions of patients.”

It also is worth noting that Intarcia’s board of directors includes former Merck executive Nancy Thornberry, who oversaw Januvia discovery and development.